Qualcomm Announces First Quarter Fiscal 2009 Results
Revenues
Pro Forma EPS
Operating Income Exceeds Prior Guidance
Total Qualcomm (GAAP) First Quarter Results
Total Qualcomm results are reported in accordance with generally accepted accounting principles (GAAP).
- Revenues:
$2.52 billion , up 3 percent year-over-year and down 25 percent sequentially. - Operating income:
$745 million , down 2 percent year-over-year and 44 percent sequentially. - Net income:
$341 million , down 56 percent year-over-year and 61 percent sequentially. - Diluted earnings per share:
$0.20 , down 57 percent year-over-year and 62 percent sequentially. - Effective tax rate: 24 percent for the quarter. Fiscal 2009 estimated tax rate of approximately 22 percent.
- Estimated share-based compensation:
$99 million , net of tax, up 16 percent year-over-year and 1 percent sequentially. - Operating cash flow:
$3.5 billion ; included a payment of$2.5 billion received inOctober 2008 related to the execution of new license and settlement agreements with Nokia Corporation/Nokia Inc. (Nokia). - Return of capital to stockholders: In the quarter, dividends announced totaled
$264 million , or$0.16 per share, which were paidJanuary 7, 2009 , and$284 million related to the repurchase of common stock.
Qualcomm Pro Forma First Quarter Results
Pro forma results exclude the Qualcomm Strategic Initiatives (QSI) segment, certain estimated share-based compensation, certain tax items related to prior years and acquired in-process research and development (R&D) expense.
- Revenues:
$2.51 billion , up 3 percent year-over-year and down 25 percent sequentially. - Operating income:
$986 million , up 4 percent year-over-year and down 38 percent sequentially. - Net income:
$520 million , down 40 percent year-over-year and 51 percent sequentially. - Diluted earnings per share:
$0.31 , down 40 percent year-over-year and 51 percent sequentially; excludes$0.05 loss per share attributable to the QSI segment and$0.06 loss per share attributable to certain estimated share-based compensation. - Effective tax rate: 25 percent for the quarter and estimated for fiscal 2009.
- Free cash flow:
$3.42 billion ; included a payment of$2.5 billion received inOctober 2008 related to the execution of new license and settlement agreements with Nokia. (Defined as net cash from operating activities less capital expenditures.)
Detailed reconciliations between total Qualcomm (GAAP) results and cash flow and Qualcomm pro forma results and cash flow are included at the end of this news release. Prior period reconciliations are presented on Qualcomm’s Investor Relations web page at www.qualcomm.com.
“Despite weak economic conditions, wireless subscribers continue to migrate from second-generation to third-generation CDMA networks around the world. Our first quarter revenues were at the high end of prior guidance and operating income exceeded our prior guidance driven primarily by the mix of higher-end chipsets, higher-priced data capable devices and improved expense management,” said Dr.
“The CDMA inventory channel has contracted as we expected, and the business environment continues to remain uncertain. Reduced visibility in the marketplace makes it difficult to forecast future inventory levels or predict when a recovery will begin. As a result, while we continue to estimate healthy growth in the CDMA-device market, we have lowered our shipment estimate for calendar year 2009. Although we are not providing earnings per share guidance due to the volatility of financial markets and the impact it has had and may have on our investment portfolio and net income, we are providing revenue, operating income and our other standard guidance. Qualcomm is very fortunate to have a strong balance sheet and operating cash flows in these difficult times and we are committed to supporting our partners and driving the market forward.”
Cash and Marketable Securities
Our cash, cash equivalents and marketable securities totaled approximately
The distress in global financial markets has continued to suppress the value of our marketable securities portfolio. As a result, in evaluating the recorded values of our marketable securities at
Research and Development
Qualcomm Estimated In- Total
Pro Share-Based Process Qualcomm
($ in millions) Forma Compensation R&D QSI (GAAP)
First quarter fiscal 2009 $511 $69 $- $24 $604
As a % of revenues 20% N/M 24%
First quarter fiscal 2008 $430 $57 $2 $22 $511
As a % of revenues 18% N/M 21%
Year-over-year change ($) 19% 21% 9% 18%
Pro forma R&D expenses increased 19 percent year-over-year, primarily due to an increase in costs related to the development of integrated circuit products, next-generation CDMA and OFDMA technologies, the expansion of our intellectual property portfolio and other initiatives to support the acceleration of advanced wireless products and services, including lower-cost devices, the integration of wireless technologies with consumer electronics and computing, the convergence of multiband, multimode, multinetwork products and technologies, third-party operating systems and services platforms. QSI R&D expenses were related to MediaFLO USA.
Selling, General and Administrative
Qualcomm Estimated Total
Pro Share-Based Qualcomm
($ in millions) Forma Compensation QSI (GAAP)
First quarter fiscal 2009 $305 $66 $42 $413
As a % of revenues 12% N/M 16%
First quarter fiscal 2008 $308 $58 $23 $389
As a % of revenues 13% N/M 16%
Year-over-year change ($) (1%) 14% 83% 6%
Pro forma selling, general and administrative (SG&A) expenses decreased by 1 percent year-over-year due to a decrease in costs related to litigation and legal matters partially offset by an increase in employee-related expenses in the first quarter of fiscal 2009. QSI SG&A expenses were primarily related to MediaFLO USA.
Effective Income Tax Rate
Our fiscal 2009 effective income tax rates are estimated to be 22 percent for total Qualcomm (GAAP) and 25 percent for Qualcomm pro forma. The first quarter total Qualcomm (GAAP) effective tax rate of 24 percent is higher than the estimated annual effective tax rate primarily due to amounts recorded during the quarter for a valuation allowance on capital losses, partially offset by a tax benefit related to fiscal 2008 as a result of the retroactive reenactment of the federal R&D credit.
Qualcomm Strategic Initiatives
The QSI segment is composed of our strategic investments, including our MediaFLO USA subsidiary. Total Qualcomm (GAAP) results for the first quarter of fiscal 2009 included a
Business Outlook
The following statements are forward looking and actual results may differ materially. The “Note Regarding Forward-Looking Statements” at the end of this news release provides a description of certain risks that we face, and our annual and quarterly reports on file with the Securities and Exchange Commission (SEC) provide a more complete description of risks.
The continuing global financial crisis and the resulting slowdown in the worldwide economy is causing contraction in the CDMA-based channel inventory, resulting in lower demand for CDMA-based MSM integrated circuits, adversely affecting our revenues and operating results. In addition, the financial crisis has had, and may continue to have, an impact on the value of our marketable securities portfolio and net investment income (loss), including other-than-temporary impairments in the first quarter of fiscal 2009. While we do not forecast impairments, we do have net unrealized losses on marketable securities that could be recognized in future periods if market conditions do not improve. Given the unprecedented daily market volatility and the significant judgments involved, accurately forecasting other-than-temporary impairments associated with our marketable securities portfolio is extremely difficult and actual results could vary materially. As a result, while we are providing revenue, operating income and our other standard guidance, we are not providing earnings per share guidance.
Moreover, our outlook does not include provisions for the consequences of injunctions or significant possible damages related to litigation matters, unless damages or injunctions have been awarded by a court. In addition, due to their nature, certain income and expense items, such as realized investment gains or losses, gains and losses on certain derivative instruments or asset impairments, cannot be accurately forecast. Accordingly, we exclude forecasts of such items from our business outlook, and actual results may vary materially from the business outlook if we incur any such income or expense items.
The following table summarizes total Qualcomm (GAAP) and Qualcomm pro forma guidance based on the current business outlook. The pro forma business outlook provided below is presented consistent with the presentation of pro forma results elsewhere herein.
The following estimates are approximations and are based on the current business outlook:
Business Outlook Summary
SECOND FISCAL QUARTER
Q2'08 Current Guidance
Results (2) Q2'09 Estimates (3)
Qualcomm Pro Forma
Revenues $2.60B $2.25B - $2.45B
Year-over-year change decrease 6% - 14%
Operating income $1.02B $0.75B - $0.85B
Year-over-year change decrease 16% - 26%
Total Qualcomm (GAAP)
Revenues $2.61B $2.25B - $2.45B
Year-over-year change decrease 6% - 14%
Operating income $0.81B $0.50B - $0.60B
Year-over-year change decrease 26% - 38%
Operating income (loss) attributable
to QSI ($0.07B) ($0.10B)
Operating income (loss) attributable
to estimated share-based compensation ($0.13B) ($0.15B)
Operating Income (loss) attributable
to in-process R&D (4) n/a not provided
Metrics
MSM shipments approx. 85M approx. 60M - 65M
CDMA/WCDMA devices shipped (1) approx. 112M* approx. 116M - 121M*
CDMA/WCDMA device wholesale average
selling price (1) approx. $222* approx. $207*
* Shipments in December
quarter, reported in
March quarter
FISCAL YEAR
Prior Current
Guidance Guidance
FY 2008 FY 2009 FY 2009
Results Estimates(3) Estimates(3)
Qualcomm Pro Forma
Revenues $11.13B $10.2B - $10.8B $9.3B - $9.8B
Year-over-year change decrease 3% - 8% decrease 12% - 16%
Operating income $4.60B $3.7B - $3.9B $3.2B - $3.5B
Year-over-year change decrease 15% - 20% decrease 24% - 30%
Total Qualcomm (GAAP)
Revenues $11.14B $10.2B - $10.8B $9.3B - $9.8B
Year-over-year change decrease 3% - 8% decrease 12% - 17%
Operating income $3.73B $2.6B - $2.8B $2.2B - $2.5B
Year-over-year change decrease 25% - 30% decrease 33% - 41%
Operating income (loss)
attributable to QSI ($0.32B) ($0.45B) ($0.40B)
Operating income (loss)
attributable to estimated
share-based compensation ($0.54B) ($0.65B) ($0.60B)
Operating income (loss)
attributable to in-process
R&D (4) ($0.01B) n/a not provided
Metrics
Fiscal year* CDMA/WCDMA
device wholesale
average selling
price (1) approx. $219 approx. $195 approx. $202
* Shipments in Sept.
to June quarters,
reported in Dec.
to Sept. quarters
CALENDAR YEAR Device Estimates (1)
Prior Current Prior Current
Guidance Guidance Guidance Guidance
Calendar Calendar Calendar Calendar
CDMA/WCDMA device 2008 2008 2009 2009
shipments Estimates Estimates Estimates Estimates
March quarter approx. 107M approx. 107M not provided not provided
June quarter approx. 119M approx. 119M not provided not provided
September
quarter approx. 121M - 126M approx. 125M not provided not provided
December
quarter not provided approx. not provided not provided
116M - 121M
Calendar year
range (approx.) 475M - 485M 468M - 473M 580M - 620M 540M - 590M
Midpoint Midpoint Midpoint Midpoint
CDMA/WCDMA
units approx. 480M approx. 471M approx. 600M approx. 565M
CDMA units approx. 213M approx. 209M approx. 230M approx. 212M
WCDMA units approx. 267M approx. 262M approx. 370M approx. 353M
(1) CDMA/WCDMA device shipments and average selling prices are for
estimated worldwide device shipments, including shipments not
reported to Qualcomm.
(2) Our Q2'08 results do not include royalty revenues attributable to
Nokia's sales.
(3) While we do not forecast impairments, we do have net unrealized
losses on marketable securities that could be recognized in future
periods if market conditions do not improve.
(4) In January 2009, we acquired handheld graphics and multimedia assets
from Advanced Micro Devices. We are still in the process of
finalizing the accounting for the acquisition, which may include
in-process R&D.
Sums may not equal totals due to rounding.
Results of Business Segments (in millions, except per share data):
First Quarter - Fiscal Year 2009
Pro Forma
Reconciling
Segments QCT QTL QWI Items (1)
Revenues $1,334 $1,006 $170 $1
Change from prior year (15%) 55% (19%) N/M
Change from prior quarter (24%) (27%) (11%) N/M
Operating income (loss)
Change from prior year
Change from prior quarter
EBT $168 $874 $3 $(351)
Change from prior year (64%) 62% (88%) N/M
Change from prior quarter (63%) (30%) N/M N/M
EBT as a % of revenues 13% 87% 2% N/M
Net income (loss)
Change from prior year
Change from prior quarter
Diluted EPS
Change from prior year
Change from prior quarter
Diluted shares used
Qualcomm Estimated Total
Pro Share-Based Qualcomm
Segments Forma Compensation(2) QSI (3) (GAAP)
Revenues $2,511 $- $6 $2,517
Change from prior year 3% 500% 3%
Change from prior quarter (25%) 20% (25%)
Operating income (loss) $986 $(145) $(96) $745
Change from prior year 4% (17%) (48%) (2%)
Change from prior quarter (38%) 1% 1% (44%)
EBT $694 $(145) $(98) $451
Change from prior year (38%) (17%) (78%) (52%)
Change from prior quarter (49%) 1% 6% (59%)
EBT as a % of revenues 28% N/M N/M 18%
Net income (loss) $520 $(99) $(80) $341
Change from prior year (40%) (18%) (300%) (56%)
Change from prior quarter (51%) (1%) 2% (61%)
Diluted EPS $0.31 $(0.06) $(0.05) $0.20
Change from prior year (40%) (20%) (400%) (57%)
Change from prior quarter (51%) 0% 0% (62%)
Diluted shares used 1,667 1,667 1,667 1,667
Fourth Quarter - Fiscal Year 2008
Pro Forma
Reconciling
Segments QCT QTL QWI Items (1)
Revenues $1,761 $1,374 $190 $4
Operating income (loss)
EBT 449 1,247 (24) (315)
Net income (loss)
Diluted EPS
Diluted shares used
Qualcomm Estimated Total
Pro Share-Based Qualcomm
Segments Forma Compensation(2) QSI (3) (GAAP)
Revenues $3,329 $- $5 $3,334
Operating income (loss) 1,578 (146) (97) 1,335
EBT 1,357 (146) (104) 1,107
Net income (loss) 1,058 (98) (82) 878
Diluted EPS $0.63 $(0.06) $(0.05) $0.52
Diluted shares used 1,678 1,678 1,678 1,678
First Quarter - Fiscal Year 2008
Pro Forma
Reconciling
Segments QCT QTL QWI Items (1)
Revenues $1,574 $650 $210 $5
Operating income (loss)
EBT 470 541 24 76
Net income (loss)
Diluted EPS
Diluted shares used
Qualcomm Estimated In- Total
Pro Share-Based Process Qualcomm
Segments Forma Compensation(2) R&D QSI (3) (GAAP)
Revenues $2,439 $- $- $1 $2,440
Operating income (loss) 948 (124) (2) (65) 757
EBT 1,111 (124) (2) (55) 930
Net income (loss) 872 (84) (1) (20) 767
Diluted EPS $0.52 $(0.05) $- $(0.01) $0.46
Diluted shares used 1,664 1,664 1,664 1,664 1,664
Second Quarter - Fiscal Year 2008
Pro Forma
Reconciling
Segments QCT QTL QWI Items (1)
Revenues $1,620 $795 $ 194 $(5)
Operating income (loss)
EBT 427 684 - (12)
Net income (loss)
Diluted EPS
Diluted shares used
Qualcomm Estimated Total
Pro Share-Based Qualcomm
Segments Forma Compensation(2) QSI (3) (GAAP)
Revenues $2,604 $- $2 $2,606
Operating income (loss) 1,017 (130) (74) 813
EBT 1,099 (130) (63) 906
Net income (loss) 894 (88) (40) 766
Diluted EPS $0.54 $(0.05) $(0.02) $0.47
Diluted shares used 1,643 1,643 1,643 1,643
Twelve Months - Fiscal Year 2008
Pro Forma
Reconciling
Segments QCT QTL QWI Items (1)
Revenues $6,717 $3,622 $785 $6
Operating income (loss)
EBT 1,833 3,142 (1) (290)
Net income (loss)
Diluted EPS
Diluted shares used
Qualcomm Estimated In- Total
Pro Share-Based Process Qualcomm
Segments Forma Compensation(2) R&D QSI (3) (GAAP)
Revenues $11,130 $- $- $12 $11,142
Operating income (loss) 4,604 (540) (14) (320) 3,730
EBT 4,684 (540) (14) (304) 3,826
Net income (loss) 3,740 (365) (13) (202) 3,160
Diluted EPS $2.25 $(0.22) $(0.01) $(0.12) $1.90
Diluted shares used 1,660 1,660 1,660 1,660 1,660
(1) Pro forma reconciling items related to revenues consist primarily of
other nonreportable segment revenues less intersegment eliminations.
Pro forma reconciling items related to earnings before taxes consist
primarily of certain investment income, research and development
expenses and marketing expenses that are not allocated to the
segments for management reporting purposes, nonreportable segment
results and the elimination of intersegment profit.
(2) Certain share-based compensation is included in operating expenses
as part of employee-related costs but is not allocated to the
Company's segments as such costs are not considered relevant by
management in evaluating segment performance.
(3) At fiscal year-end, the sum of the quarterly tax provisions for each
column, including QSI, equals the annual tax provisions for each
column computed in accordance with GAAP. In interim quarters, the
tax provision for the QSI operating segment is computed by
subtracting the tax provision for Qualcomm pro forma, the tax items
column and the tax provisions related to estimated share-based
compensation and in-process R&D from the tax provision for total
Qualcomm (GAAP).
N/M - Not Meaningful
Sums may not equal totals due to rounding.
Conference Call
Qualcomm’s first quarter fiscal 2009 earnings conference call will be broadcast live on
Editor’s Note: To view the web slides that accompany this earnings release and conference call, please go to the Qualcomm Investor Relations website at http://investor.qualcomm.com/results.cfm.
Qualcomm Incorporated (Nasdaq: QCOM) is a leader in developing and delivering innovative digital wireless communications products and services based on CDMA and other advanced technologies. Headquartered in
Note Regarding Use of Non-GAAP Financial Measures
The Company presents pro forma financial information that is used by management (i) to evaluate, assess and benchmark the Company’s operating results on a consistent and comparable basis, (ii) to measure the performance and efficiency of the Company’s ongoing core operating businesses, including the Qualcomm CDMA Technologies, Qualcomm Technology Licensing and Qualcomm Wireless & Internet segments and (iii) to compare the performance and efficiency of these segments against each other and against competitors outside the Company. Pro forma measurements of the following financial data are used by the Company’s management: revenues, R&D expenses, SG&A expenses, total operating expenses, operating income, net investment income (loss), income before income taxes, effective tax rate, net income, diluted earnings per share, operating cash flow and free cash flow. Management is able to assess what it believes is a more meaningful and comparable set of financial performance measures for the Company and its business segments by using pro forma information. As a result, management compensation decisions and the review of executive compensation by the Compensation Committee of the Board of Directors focus primarily on pro forma financial measures applicable to the Company and its business segments.
Pro forma information used by management excludes the QSI segment, certain estimated share-based compensation, certain tax items related to prior years and acquired in-process R&D. The QSI segment is excluded because the Company expects to exit its strategic investments at various times, and the effects of fluctuations in the value of such investments are viewed by management as unrelated to the Company’s operational performance. Estimated share-based compensation, other than amounts related to share-based awards granted under a bonus program that may result in the issuance of unrestricted shares of the Company’s common stock, is excluded because management views such share-based compensation as unrelated to the Company’s operational performance. Moreover, it is generally not an expense that requires or will require cash payment by the Company. Further, share-based compensation related to options is affected by factors that are subject to change, including the Company’s stock price, stock market volatility, expected option life, risk-free interest rates and expected dividend payouts in future years. Certain tax items related to prior years are excluded in order to provide a clearer understanding of the Company’s ongoing pro forma tax rate and after tax earnings. The Company decided to include the benefit of the retroactive extension of the federal research and development tax credit in pro forma results starting in fiscal 2009 because it recurs with relative frequency and would have been included in the Company’s pro forma results for the prior year if it had been reenacted in the prior fiscal year. Acquired in-process R&D is excluded because such expense is viewed by management as unrelated to the operating activities of the Company’s ongoing core businesses.
The Company presents free cash flow, defined as net cash provided by operating activities less capital expenditures, to facilitate an understanding of the amount of cash flow generated that is available to grow its business and to create long-term shareholder value. The Company believes that this presentation is useful in evaluating its operating performance and financial strength. In addition, management uses this measure to evaluate the Company’s performance, to value the Company and to compare its operating performance with other companies in the industry.
The non-GAAP pro forma financial information presented herein should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. In addition, “pro forma” is not a term defined by GAAP, and, as a result, the Company’s measure of pro forma results might be different than similarly titled measures used by other companies. Reconciliations between total Qualcomm (GAAP) results and Qualcomm pro forma results and between total Qualcomm (GAAP) cash flow and Qualcomm pro forma cash flow are presented herein.
Note Regarding Forward-Looking Statements
In addition to the historical information contained herein, this news release contains forward-looking statements that are subject to risks and uncertainties. Actual results may differ substantially from those referred to herein due to a number of factors, including but not limited to risks associated with: the rate of deployment of our technologies in wireless networks and of 3G wireless communications, equipment and services, including CDMA2000 1X, 1xEV-DO, WCDMA, HSPA and OFDMA both domestically and internationally; the current uncertainty of global economic conditions and its potential impact on demand for our products, services or applications and our marketable securities portfolio; attacks on our business model, including results of current and future litigation and arbitration proceedings, as well as actions of governmental or quasi-governmental bodies, and the costs we incur in connection therewith, including potentially damaged relationships with customers and operators who may be impacted by the results of these proceedings; our dependence on major customers and licensees; foreign currency fluctuations; strategic loans, investments and transactions we have or may pursue; our dependence on third-party manufacturers and suppliers; our ability to maintain and improve operational efficiencies and profitability; the development, deployment and commercial acceptance of the MediaFLO USA network and FLO(TM) technology; as well as the other risks detailed from time-to-time in our SEC reports.
Qualcomm is a registered trademark of Qualcomm Incorporated. FLO is a trademark of Qualcomm Incorporated. CDMA2000 is a registered trademark of the Telecommunications Industry Association (TIA USA). All other trademarks are the property of their respective owners.
Qualcomm Contact:John GilbertPhone: 1-858-658-4813
e-mail: ir@qualcomm.com
Qualcomm Incorporated
CONSOLIDATED STATEMENTS OF OPERATIONS
This schedule is to assist the reader in reconciling from Qualcomm
Pro Forma results to Total Qualcomm (GAAP) results
(In millions, except per share data)
(Unaudited)
Three Months Ended December 28, 2008
Qualcomm Estimated Total
Pro Share-Based Qualcomm
Forma Compensation QSI (GAAP)
Revenues:
Equipment and services $1,417 $- $6 $1,423
Licensing and royalty
fees 1,094 - - 1,094
Total revenues 2,511 - 6 2,517
Operating expenses:
Cost of equipment and
services revenues 709 10 36 755
Research and
development 511 69 24 604
Selling, general and
administrative 305 66 42 413
Total operating
expenses 1,525 145 102 1,772
Operating income (loss) 986 (145) (96) 745
Investment loss, net (292)(a) - (2)(b) (294)
Income (loss) before
income taxes 694 (145) (98) 451
Income tax (expense)
benefit (174)(c) 46 18(d) (110)(c)
Net income (loss) $520 $(99) $(80) $341
Earnings (loss) per
common share:
Diluted $0.31 $(0.06) $(0.05) $0.20
Shares used in per
share calculations:
Diluted 1,667 1,667 1,667 1,667
Supplemental Financial Data:
Operating Cash Flow $3,629 $(16)(f) $(112) $3,501
Operating Cash Flow
as a % of Revenues 145% N/M 139%
Free Cash Flow(e) $3,419 $(16)(f) $(136) $3,267
Free Cash Flow
as a % of Revenues 136% N/M 130%
(a) Included $388 million in other-than-temporary losses on investments,
which were not part of the Company's strategic investment portfolio,
$38 million in net realized losses on investments and $1 million in
interest expense, partially offset by $135 million in interest and
dividend income related to cash, cash equivalents and marketable
securities.
(b) Included $4 million in other-than-temporary losses on investments,
$2 million in interest expense and $1 million in equity in losses of
investees, partially offset by $5 million in net realized gains on
investments.
(c) The first quarter of fiscal 2009 effective tax rates were
approximately 24% for total Qualcomm (GAAP) and 25% for Qualcomm pro
forma, which included a tax benefit of $38 million and $37 million,
respectively, related to fiscal 2008 as a result of the retroactive
reenactment of the federal R&D credit. Historically, similar tax
benefits have been excluded from Qualcomm pro forma results.
(d) At fiscal year-end, the sum of the quarterly tax provisions for each
column, including QSI, equals the annual tax provisions for each
column computed in accordance with GAAP. In interim quarters, the
tax provision for the QSI operating segment is computed by
subtracting the tax provision for Qualcomm pro forma, the tax items
column and the tax provisions related to estimated share-based
compensation and in-process R&D from the tax provision for total
Qualcomm (GAAP).
(e) Free Cash Flow is calculated as net cash provided by operating
activities less capital expenditures. Reconciliation of these
amounts is included in the Reconciliation of Pro Forma Free Cash
Flows to Total Qualcomm (GAAP) net cash provided by operating
activities and other supplemental disclosures for the three months
ended December 28, 2008, included herein.
(f) Incremental tax benefits from stock options exercised during the
period.
Qualcomm Incorporated
Reconciliation of Pro Forma Free Cash Flows to
Total Qualcomm (GAAP) net cash provided by operating activities
and other supplemental disclosures
(In millions)
(Unaudited)
Three Months Ended December 28, 2008
Qualcomm Estimated Total
Pro Share-Based Qualcomm
Forma Compensation QSI (GAAP)
Net cash provided (used)
by operating activities $3,629 $(16)(a) $(112) $3,501
Less: capital expenditures (210) - (24) (234)
Free cash flow $3,419 $(16) $(136) $3,267
Other supplemental cash
disclosures:
Cash transfers from QSI (1) $11 $- $(11) $-
Cash transfers to QSI (2) (152) - 152 -
Net cash transfers $(141) $- $141 $-
(1) Cash from sale of strategic debt and equity investments and partial
settlement of investment receivables.
(2) Funding for strategic debt and equity investments, capital
expenditures and other QSI operating expenses.
Three Months Ended December 30, 2007
Qualcomm Estimated In- Total
Pro Share-Based Process Qualcomm
Forma Compensation R&D QSI (GAAP)
Net cash provided
(used) by operating
activities $1,014 $(48)(a) $(2) $(84) $880
Less: capital
expenditures (106) - - (21) (127)
Free cash flow $908 $(48) $(2) $(105) $753
(a) Incremental tax benefits from stock options exercised during the
period.
Qualcomm Incorporated
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
(Unaudited)
ASSETS
December September
28, 2008 28, 2008
Current assets:
Cash and cash equivalents $3,826 $1,840
Marketable securities 5,183 4,571
Accounts receivable, net 943 4,038
Inventories 458 521
Deferred tax assets 299 289
Collateral held under securities
lending 11 173
Other current assets 290 291
Total current assets 11,010 11,723
Marketable securities 4,048 4,858
Deferred tax assets 996 830
Property, plant and equipment, net 2,262 2,162
Goodwill 1,494 1,517
Other intangible assets, net 3,080 3,104
Other assets 565 369
Total assets $23,455 $24,563
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $376 $570
Payroll and other benefits related
liabilities 347 406
Dividends payable 264 -
Income taxes payable 48 20
Unearned revenues 403 394
Obligations under securities lending 11 173
Other current liabilities 633 728
Total current liabilities 2,082 2,291
Unearned revenues 3,666 3,768
Income taxes payable 240 227
Other liabilities 330 333
Total liabilities 6,318 6,619
Stockholders' equity:
Preferred stock, $0.0001 par value;
issuable in series;
8 shares authorized; none outstanding
at December 28, 2008 and
September 28, 2008 - -
Common stock, $0.0001 par value; 6,000
shares authorized; 1,649 and 1,656
shares issued and outstanding at
December 28, 2008 and September 28,
2008, respectively - -
Paid-in capital 7,413 7,511
Retained earnings 10,794 10,717
Accumulated other comprehensive loss (1,070) (284)
Total stockholders' equity 17,137 17,944
Total liabilities and stockholders'
equity $23,455 $24,563
Qualcomm Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
Three Months Ended
December December
28, 2008 30, 2007
Revenues:
Equipment and services $1,423 $1,703
Licensing and royalty fees 1,094 737
Total revenues 2,517 2,440
Operating expenses:
Cost of equipment and services
revenues 755 783
Research and development 604 511
Selling, general and
administrative 413 389
Total operating expenses 1,772 1,683
Operating income 745 757
Investment (loss) income, net (294) 173
Income before income taxes 451 930
Income tax expense (110) (163)
Net income $341 $767
Basic earnings per common share $0.21 $0.47
Diluted earnings per common
share $0.20 $0.46
Shares used in per share
calculations:
Basic 1,653 1,635
Diluted 1,667 1,664
Dividends per share paid $- $-
Dividends per share announced $0.16 $0.14
Qualcomm Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended
December December
28, 2008 30, 2007
Operating Activities:
Net income $341 $767
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 152 108
Revenues related to
non-monetary exchanges (29) -
Non-cash portion of income tax expense 45 72
Non-cash portion of share-based
compensation expense 145 125
Incremental tax benefit from
stock options exercised (16) (48)
Net realized losses (gains) on
marketable securities and
other investments 33 (82)
Other-than-temporary losses on
marketable securities and
other investments 392 57
Other items, net (14) 4
Changes in assets and
liabilities, net of effects of acquisitions:
Accounts receivable, net 2,716 43
Inventories 65 (47)
Other assets (19) 11
Trade accounts payable (192) (77)
Payroll, benefits and other
liabilities (54) (35)
Unearned revenues (64) (18)
Net cash provided by operating activities 3,501 880
Investing Activities:
Capital expenditures (234) (127)
Purchases of available-for-sale
securities (2,586) (1,684)
Proceeds from sale of
available-for-sale securities 1,373 2,492
Cash received for partial
settlement of investment receivables 202 -
Other investments and
acquisitions, net of cash acquired (14) (229)
Change in collateral held under
securities lending 162 138
Other items, net (4) -
Net cash (used) provided by
investing activities (1,101) 590
Financing Activities:
Proceeds from issuance of
common stock 26 77
Incremental tax benefit from
stock options exercised 16 48
Repurchase and retirement of
common stock (285) (900)
Change in obligations under
securities lending (162) (138)
Other items, net (1) (1)
Net cash used by financing activities (406) (914)
Effect of exchange rate changes
on cash (8) 1
Net increase in cash and cash
equivalents 1,986 557
Cash and cash equivalents at
beginning of period 1,840 2,411
Cash and cash equivalents at
end of period $3,826 $2,968
SOURCE Qualcomm Incorporated